TMI Blog2018 (6) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... - ITA No.542(Asr)/2016 - - - Dated:- 29-5-2018 - SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER For The Appellant : Sh. Harminder Syal (Ld. Adv.) For The Respondent : Sh. Rajeev Gubgotra (Ld. DR) ORDER PER N.K.CHOUDHRY, JM: The instant appeal has been preferred by the Assessee/Appellant, on feeling aggrieved against the order dated 08.09.2016 passed by the Ld. CIT(A)-2, Jalandhar, u/s 250(6) of the Income Tax Act, 1961 (hereinafter called as the Act ). 2. The following grounds of appeal raised by the assessee. 1. That the order of the CIT (A) is against the facts on record and provisions of law thus the same is arbitrary, bad in the eyes of law and is liable to be struck down. 2. That the Ld. CIT (A) has erred in upholding an addition of ₹ 15lacs in the returned income made by the A.O by ignoring the retraction) statement of the appellant mentioned on the computation of income filed alongwith the return of income and by also overlooking the fact that the loose paper entry sheets containing the name of the appellant and the figures mentioned therein allegedly impounded during the course of survey ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cord the material on the basis of which he arrived at the said conclusion except for the alleged confession statement as well unreliable piece of entry in the name of Didar Singh which even do not carry the paternity of the said person and a copy of power of attorney which do not establish any unexplained investment by the assessee. 7. That CIT (A) has also erred in observing in Para No. 2.4 of the impugned order that incriminating documents seized from the premises of Mohan Lai Baiai during the course of survey indicated innumerable transactions of purchase sale of immovable properties done by theappellant alongwith Sarv~Sh. Mohan Lai Des Raj. In fact the referred documents do not indicate any alleged Transactions nor do the same implicate the appellant in entering any into any unexplained property transactions. 8. That the Ld. CIT (A) has wrongly applied the ratio of the judgment laid in the case of Sh. Navdeep Dhingra v/s Department of Income Tax in ITA No. 691/Chd/2011 as the facts of the instant case are totally different from the case referred by the CIT (A). 9. That the Ld. CIT (A) has passed the impugned order by considering the week, unreliable and un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of loose sheet entries and one power attorney in the name of the appellant herein which even do not co-relate him with any investment made by him from undisclosed sources as the appellant was not under any legal obligation to maintain books of account, therefore, the addition u/s 68 cannot be sustained. Further, it was also submitted that ITO has not given any warning to the assessee/appellant herein before putting question to the assessee/appellant to the effect that any admission/confession can be used against him in any proceedings under the Act and its repercussion and, nor he was made aware of his right to engage lawyer at the time of recording of alleged confessional statement. As procedure established by law mandates that it is duty of the officer before recording confession/admission to explain to the person making it that he is not bound to make a confession and that, if he does so, it may be used as evidence against him; and the officer shall not record any such confession unless, upon questioning the person making it, he has reason to believe that it is being made voluntarily. Further it was also submitted that Ld. CIT(A) erred in observing para. 2.3 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onfessional statement in pursuance to survey u/s 133A of the Act. 7.1 The Apex Court and the various High Courts while dealing with the retracted confession analyzed and summarized the position in detail and some of the conclusions drawn by the Apex Court and the High Courts are as under: The Apex Court in the case of Pulkngode Rubber Producer Co. Ltd. vs. CIT [1973] 91 ITR 18, held that An admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It is open to the person who made the admission to show that it is incorrect . The Apex Court in the case of CIT vs S. Khader Khan Son (2012) 352 ITR 0480 (SC), held that The statement recorded u/s 133A of the Act has no evidentiary value and any admission made during survey statement cannot be the basis of addition . Further the Apex Court upheld the finding of the Madras High Court to the effect that Sec. 133A does not empower any ITO to examine any person on oath, so statement recorded u/s 133A has no evidentiary value and any admission made during such statement cannot be made basis of the addition. The word may used in Sec.133A(3) (iii) m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Khan, (2008) 300 ITR 157 have also taken a similar view. The relevant portion of the Kerala High Court judgment in the case of Paul Mathews Sons (supra) is reproduced herein below :- The provision also enables the income-tax authority to ..no evidentiary value and the Income-tax Officer was well aware of this. 14. Moreover, the word may‟ used in Section 133A(3)(iii) of the Act clarifies beyond doubt that the material collected and the statement recorded during the survey is not a conclusive piece of evidence by itself. 15. In any event, it is settled law that though an admission is extremely important piece of evidence, it cannot be said to be conclusive and it is open to the person who has made the admission to show that it is incorrect. 7.4 The High Court Of Telangana And Andhra Pradesh in the case of Gajjam Chinna Yellappa Vs. Income-tax Officer (2015) 370 ITR 671 (AP) ,while dealing with addition based on admission of Asseeee held as under :- 9. The Act empowers the Assessing Officers or other authorities to record the statements of the assessees, whenever a survey or search is conducted under the relevant pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icating the appeals filed before them. On the undisputed facts of the case, there was absolutely no basis for the Assessing Officer to fasten the liability upon the appellants. Our conclusion find support from the Circular dated March 10, 2003, issued by the Central Board of Direct Taxes, which took exception to the initiation of the proceedings on the basis of retracted statements. 14. Therefore, I. T. T. A Nos. 268, 273 and 308 of 2003 are allowed and the orders of assessment dated December 1, 1998, are set aside. Since the orders of assessment are set aside, I. T. T. A. Nos. 287, 291 and 294 of 2006 have virtually become infructuous and they are, accordingly, closed. There shall be no order as to costs. 7.5 The CBDT vide its letter dated 10.3.2003 issued certain instructions to follow during search and survey operations, which are reproduced herein below:- Sub:- Confession of additional Income during the course of search seizureand survey operation regarding Further, in respect of pending assessment proceedings also, assessing Instances have come to the notice of the Board where assessees have claimed thatthey have been forced to confess the undisclosed income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the addition of ₹ 15 lacs mainly focused on the confessional/disclosure statement of the appellant. The appellant did not disclose the said amount of ₹ 15 Lakhs in his return of income and contested the same not only in the assessment proceeding itself but also vide letter dated 27th March, 2009 submitted to the Income Tax Officer-Ward-1, Phagwara. It was specifically mentioned that he was forced to surrender ₹ 15 lacs by showing certain entries appearing in the books of Sh. Mohan Lal Bajaj without supplying the copies of the said entries, however, under protest, he deposited the tax on the surrendered amount and further requested to supply the copies of material which was used against him by the Department for the surrendered amount. It is a matter of fact that the said reply was not replied by the Assessing Officer. In that eventuality the appellant was compelled to file an application dated 30.03.2009 under RTI Act which is also placed in Paper Book submitted herein, seeking information qua material used against the surrendered income of ₹ 15 lacs , found during the course of survey conducted u/s 133 A of the Income Tax Act in the case of Sh. Mohan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following words: An account presupposes the existence of two persons such as a seller and a purchaser, creditor and debtor. Admittedly, the alleged diaries in the present case are not records of the entries arising out of a contract. They do not contain the debits and credits. They can at the most be described as a memorandum kept by a person for his own benefit which will enable him to look into the same whenever the need arises to do so for his future purpose. Admittedly the said diaries were not being maintained on day-today basis in the course of business. There is no mention of the dates on which the alleged payments were made. In fact the entries there in are on monthly basis. Even the names of the persons whom the alleged payments were made do not find a mention in full. They have been shown in abbreviated form. Only certain 'letters' have been written against their names which are within the knowledge of only the scribe of the said diaries as to what they stand for and whom they refer to. x x x x x x x x x x x x x x x 17. From a plain reading of the Section it is manifest that to make there under it must be shown that it has been made in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... good reasoning and we are in full agreement with it. Applying the above tests it must be held that the two spiral note books (MR 68/91 and MR 71/91) and the two spiral pads (MR 69/91 and MR 70/91) are books within the meaning of Section 34, but not the loose sheets of papers contained in the two files (Mrs 72/91 and 73/91) . 7.8 Further in the case of the Common Cause (A registered Society and Ors Vs. Union of India Ors. interlocutory application Nos. 3 4 of 2017 in Writ Petition (Civil) No. 505/2015, the Apex Court dealt with the loose sheets and was pleased to held that It is apparent from the aforesaid discussion that loose sheets of paper are wholly irrelevant as evidence being not admissible U/s 34 so as to constitute evidence with respect to the transactions mentioned therein being of no evidentiary value. Further the Apex Court in para No.22 was pleased to held that in case of Sahara, in addition we have the adjudication by the Income Tax Settlement Commission. The order has been placed on record along with I.A. No.4. The Settlement Commission has observed that the scrutiny of entries on loose papers, computer prints, hard disk, pen drives etc. have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... belongs to the assessee and entry found on loose paper in the premises of third party without any corroborative evidence, cannot be made basis of addition. 7.10 The second document is the general power attorney dated 05.09.2002 also does not confer substantive right on which it can be said that the appellant herein had received any consideration thereof because G.P.A itself pertains to 2002 whereas search was conducted only in 2007, hence, there is a gap of five years which according to our mind also does not sound a good proof for sustaining the addition. As it is well settled by the Apex Court that admission is extremely an important piece of evidence but it cannot be said that it is conclusive as it is open to the person who made the admission to say that it is incorrect. Apex Court further upheld the finding of Madras high Court to the effect that Sec. 133A does not empower any ITO to examine any person on oath, so statement recorded u/s 133A has no evidentiary value and any admission made during such statement cannot be made basis of the addition. The word may used in Sec.133A(3) (iii) makes it clear that the material collected and the statement recorded during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the instant case because in that case, there was some corroborative material, but in the instant case, in the assessment order, nowhere the corroborative material has been shown on basis of which the addition has been sustained. 7.13 On the aforesaid analyzation and observation and cumulative effect, We are, therefore, of the view that merely on the basis of admission/confession, the assessee could not have been subjected to such additions unless and until, some corroborative evidence found in support of such admission, therefore we are unable to find any justification on the part of the lower authorities to make the addition of ₹ 15 lac on the basis of confessional statement, loose sheet of ledger and General Power of Authority (found from the premises of third party). Even there is no reason not to disbelieve the retraction made by the Assessing Officer and explanation duly supported by the evidence. Hence, the addition made by the AO and uphold by the Ld. CIT(A) is not sustainable and is liable to be deleted, ordered accordingly. 8. In the result, the appeal filed by the assessee stands allowed. Order pronounced in the open Court on 29 .05.2018. Sd/- (N.K.CHOUD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the survey on 28/6/2007, and that no income could be assessed solely on the basis of a statement, even as in fact advised by the CBDT to its officers. The Revenue, on the other hand, claims that there is corroborative material to support the said statement on oath, bearing reference to the documents found during survey. Further, there is nothing to suggest that the statement was given under duress or influence, the burden to prove which is on the deponent. The assessee had, in fact, as assured in his deposition and stated in the disclosure letter, also paid tax on the income surrendered. 3.1 I may begin by referring to some fundamental propositions. Tax can be levied only on real, and not on hypothetical, income. Two, income for a particular year can only be assessed for that year, and it being assessed or not assessed for another year, is no ground for it being assessed for another year. Further, it is the entirety of evidence, including the deposition, if any, that is to be taken into account to come to a positive inference as to income in a particular sum having arisen to or received by the assessee, so that where not returned, it could be assessed as income for the relev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id advance stood adjusted, or the property/asset in which the same was invested subsequently, i.e., on receipt, in which case ss. 69/69A could be applied with reference to the said property on the basis of the assessee having been found to be its owner during the relevant year. Though the assessee s statement speaks of his name being mentioned in several documents, the ld. counsel for the assessee, Sh. Syal, adverting to the assessee s application to the Department under RTI Act, 2005 (PB pgs. 20-21), was categorical in that no document, apart from the two afore-referred, were found, nor is there any reference to these documents in the statement. The assessee has in fact made a specific assertion in this regard before the first appellate authority (PB pg. 6). The material on record only shows the assessee to have been engaged in the property dealing along with others during the year 2002. No asset from the said earnings can be said to have been found by the Revenue for it to invoke ss. 69/69A for the current year. 4. In view of the foregoing, I am clearly unable to hold, despite the surrender statement and the incriminating material found, that there is any basis or material ..... X X X X Extracts X X X X X X X X Extracts X X X X
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